Texas Versus the United States: Another Challenge to the Affordable Care Act

By Sheldon Weisgrau | June 18, 2019

Since passage of the Affordable Care Act (ACA) in 2010, the law has faced a number of legal challenges, including several high profile cases that have been decided by the U.S. Supreme Court. During the week of July 8, a federal appeals court in New Orleans will hear another challenge to the law that threatens to upend both legal precedent and sound health policy. This case – known as Texas v. United States – may also be destined for the Supreme Court.

The case is a lawsuit about whether the ACA’s individual mandate, and by extension the entire law, is constitutional. In February 2018, the attorney general (AG) of Texas, joined by AGs from 19 other states, including Kansas and Missouri, filed suit to overturn the ACA after Congress zeroed out the penalty for an individual not having insurance. The individual mandate penalty had previously been upheld by the Supreme Court as consistent with Congress’ taxing powers. The AGs reasoned that because Congress eliminated the penalty, the mandate was no longer enforceable. They argued that the entire law was dependent on the mandate and therefore should be struck down.

The ACA was defended in court by the California AG and 16 other state AGs, after the Trump administration declined to defend the law. In December of last year, a federal district court judge in Texas agreed with the plaintiffs and declared the entire ACA to be unconstitutional. The ruling was stayed as it was appealed by the defending AGs.

If the ruling is upheld, all of the ACA would be wiped out, including Medicaid expansion, insurance consumer protections such as coverage of people with pre-existing conditions, state marketplaces for purchasing insurance, closing of the Medicare prescription drug “donut hole,” new payment and delivery reforms such as Accountable Care Organizations, and everything else. The health care world, which has been reorganized around the ACA over the last decade, would be thrown into chaos.

Few legal analysts, however, expect the Court of Appeals to uphold the decision. They note that when Congress chose to zero out the individual mandate penalty, it also retained the rest of the law affirming their intent for the insurance reforms and other provisions of the law to remain, even without the tax penalty. The judge’s ruling is considered remarkable, therefore, because it essentially decided that Congressional intent was different from the action it took.

Even lawyers who previously sued to overturn the ACA believe the judge’s reasoning in this case was flawed. One of them, joined by an attorney who has defended the ACA in the past, wrote in the New York Times that the ruling was “…an exercise of raw judicial power, unmoored from the relevant doctrines concerning when judges may strike down a whole law because of a single alleged legal infirmity buried within.”

While it’s unlikely that the ACA is in mortal danger, court cases can never be predicted with certainty. It may be 2020 or later before a final decision is reached. In the meantime, as the legal process plays out, the ACA – with the exception of the individual mandate penalty – remains intact.

Sheldon Weisgrau is the Alliance for a Healthy Kansas’ Senior Policy Adviser. Contact Sheldon at sheldon@expandkancare.com.